Pattern of real estate investment in India
Last few years brought major changes in India’s real estate sector. The game-changing rules, new taxation policies, and currently NBFC crisis are creating everybody wait and re-calibrate the investment methods.
Real estate was a flourishing sector from 2011 to 2016. Throughout this period, stock markets gave an annual come of 6.2% whereas gold gave an annual come of 3.6%. This attracted plenty of investors or supposed hot money within the residential land as a result of apparently costs were appeared solely to go up. No one needed to miss the one way bus. Developers would sell plenty of inventory at pre-launch stages itself at discounts and use customer advances received to secure approvals for the project or even pay balance land costs. With tax regulative regimes, everybody with untested capabilities wished to become a developer. With low entry barriers, new developers entered in the market, investors created out of the normal returns whereas farmers reaped a golden harvest by marketing their agricultural lands.
However, with the new macro atmosphere currently step by step setting in, and progressively seeing purging out of a number of these developers being taken to the economic condition courts. When the introduction of RERA and demonetization, which caused a brief delay, the recent NBFC crisis has junction rectifier to an additional liquidity well-successful developers. The price of funds goes up within the close to future. While not a doubt, the residential land goes through its worst part.
Some of the changes within the pattern of real estate investment that one will expect going forward during this rapidly-evolving real estate industry landscape include:
Investors choose commercial real estate over residential real estate
Investors are choosing commercial real estate instead of residential real estate because they going with the new pattern of real estate investment . Reason behind opting for commercial real estate is less ; liquidity and limited prices appreciation of residential real estate. They are investing in commercial real estate where rentals are allowing them to get their return of investments. Yields on residential properties have historically weaken by 2% and 3%.
End users should invest in residential
Since residential real estate prices remain under check. only end users (eg. businessmen, people with stable jobs, near retirement or retired ) value a stable living atmosphere more compared to the financial issues of owning and maintaining a house.
Renting is also an option for end users
Working Professionals who are on the move after some period of time due to their jobs consider renting as an option in the country where prices are hiking by the day. It makes sense to stay close to their workplaces where they save their time & money both. They are also changing pattern of real estate investment in india.
Developers need to modify their product
Since residential real estate are driving by end users preferences, developers needs to pay more attention to their actual requirements like locations, infrastructure, interior, quality of construction, prices more & most importantly time of possession. Developers who do not calibrate their business model to the enlarge macro-environment can step by step see an exit from the market through market-driven forces.
